By Samburaj Das for CCN
Japan’s Mizuho Financial Group, subsidiary bank Mizuho and IBM Japan are jointly building a blockchain platform for trade financing. With the blockchain solution, Mizuho is looking at improving supply chain- and trading operations’ efficiency.
Announced in Tokyo this week, the joint endeavor sees blockchain technology as a viable solution to enable quick and secure exchange of digitized trade documents and transactional details in a supply chain ecosystem. An immutable ledger brings greater transparency and trust among parties in a transaction.
The blockchain solution will enable a multitude of participants in a supply chain including exporters, importers, shippers, insurance companies, port operators and port authorities to share near instantaneous and critical shipment details of a trade. This will also enable financiers (banks) of importers and exporters to release funds without the burden of inefficiencies including waiting for paperwork and other manual processes.
Masao Sanbe, managing director of Industry Sales at IBM Japan stated:
The Mizuho Financial Group and Mizuho Bank’s project marks an important step in using blockchain technology for actual operations in trade finance. In working with global trade networks to digitize documentation and processes, IBM recognizes the potential of blockchain to help streamline financial trade services.
The blockchain platform will be developed using the Hyperledger Fabric, a blockchain framework hosted by the Linux Foundation-led open-source cross-industry blockchain consortium, the Hyperledger Project. The project will ultimately see real-world trade transactions conducted on a blockchain where digitized letters of credit will be shared between the importer, exporter and their banks.
Mizuho will play its role as the financier for these real-world trade transactions which are expected to go live in June 2017, as part of the first phase of the project. The bank eventually sees pushing the blockchain trade platform commercially beyond its testing phase.
The Japanese megabank is notably involved in a number of blockchain-related endeavors in the past and has also tested its own digital currency developed in partnership with IBM Japan in 2016. Details of the successful trials were revealed this year. Also, Mizuho and Japan’s two other megabanks have all invested in Japan’s largest bitcoin exchange, Tokyo-based bitFlyer.
A number of global trading hubs are fast-tracking development of blockchain solutions in trade finance to improve operational efficiencies while enabling easier, transparent and more-streamlined financing. Hong Kong’s central bank revealed its proof-of-concept blockchain platform for trade finance in March. IBM is also working with the government of Dubai toward the development of blockchain-based trade finance with a partnership this year.